Every divorce has unique factors, but nearly all divorces involve issues concerning property division. Although division of assets is one of the biggest sources of disagreement in divorces, the vast majority of divorcing spouses are able to reach a compromise outside of court. In general, parties are more likely to be satisfied with their property division if they can achieve resolution through negotiation rather than by litigation, however there are instances where litigation is necessary. If the parties cannot reach an agreement then a judge will decide how to divide the assets. However, no one knows better than the individuals what are their financial needs are and how best to meet them, so it is prudent to see if an agreement can be reached before litigating. Here are some negotiation guidelines that can assist parties in achieving a property settlement without litigation.

Preparation before negotiation

  • Understand the state's property laws. Each state has its own unique set of laws governing property division in divorce. Meeting with an attorney who is an expert in the field of family law can assist a party in gaining an understanding of the relevant law. Understanding legal entitlement to property and obligation for debt, if any, will help to ensure that the division is fair when negotiating the terms of the agreement.
  • Comprehend the entirety of the marital estate. One cannot even commence negotiation until there is a full understanding of all the components of the marital estate. If the assets and values of same are not yet identified, this information can be gained through discovery (a legal tool to procure information). Both parties will be compelled to provide all relevant financial information so that a complete picture of the marital estate is established. The parties may need to hire professional appraisers to determine the value of certain assets such as real estate or a business. Only once all assets are disclosed and valued then the parties are ready to start discussing possible settlement.
  • Define the financial needs. Next, consider the relative financial needs, and define overall goals for the negotiation. Major components of financial need include: income, earning capacity, age, health, number of children, retirement plans, etc. One should also consider what will be their future needs, i.e. health insurance, housing, etc.

The negotiation

  • Traditional negotiation. Traditional negotiation usually involves each spouse's attorney. It is the most effective way of reaching settlement because the attorneys usually have the expertise to understand what each party could gain or forfeit if they were to litigate, and thus, can give their clients proper guidance to reach the best outcome. The mechanics of the negotiation can include one or more face to face meetings. It can also include communication through correspondence or conversation between counsel. Each side presents their respective position and negotiates until an agreement is achieved.
  • Mediation. This is a non-adversarial, non-binding process where a third party assists in helping a divorcing couple reach resolution. Mediation works best when the assets of the marital estate are relatively simple (i.e. a house and pension) and the parties are able to communicate and work together. Oftentimes each party hires their own attorney with whom to consult and review any proposed agreement.
  • Collaborative divorce. This is a relatively new process where both parties sign an agreement with attorneys specializing in the collaborative process which commits them to reaching a settlement. As part of the collaborative team, the parties may use experts or specialists to help them reach a mutual agreement. If a settlement is not reached then the lawyers who are assisting with the collaborative process withdraw from the subsequent litigation, and the parties select new counsel to represent them.

If the parties are successful in using the aforementioned tools to reach resolution, the terms of this agreement should be memorialized in a written settlement agreement which is a binding contract by which each party must abide. It is important that the parties negotiate this agreement thoroughly and seriously because once it is done, for the most part, it cannot be reopened.